Daily Market Structure & Price Action Study – 2

 

Week 2 of 4 while I'm away from home…

From the original post:

I've been writing online for over a decade now. And for that whole time I've been promoting the idea of daily study in both Market Structure and Price Action.

It's a simple task that takes no more than five minutes, but which offers incredible value to your own learning and development.

Sometimes this study fits within certain themes, if there is a particular feature of market structure which I want to focus on for a period of time.

Often though, it's completely unstructured. Simply searching for whatever captures my attention.

Either way, every trading day after the session is over, I look to the charts to find something interesting. Having done this for so long the findings are usually just reinforcing prior lessons. But occasionally, they'll uncover something new which can lead to further exploration, further learning and further growth and development.

As I'm away from home for the month of April, celebrating my 50th birthday, and unable to prepare any new articles for the YTC newsletter, I though I'd simply preload the email system and blog with a few articles which share some daily market structure and price action study.

I hope you find it useful. If you do, consider starting your own Market Structure & Price Action Journal.

Wednesday 14th March 2018:

When obvious expectations fail:

Notes:

• A ridiculously fast and long bearish price swing (A). Price just collapsed.
• Note also the massive increase in volume (B), proving eventually to be the highest volume of the day.
• Price then stalls for half an hour (C). Whatever caused the momentum drop is clearly no longer driving sentiment.
• Price breaks the low at D. Surely expectations are for continuation lower? Well, that's what many will expect. But those familiar with my writing will know that, while I'm ready for that potential, I'm more excited by the potential for the break to fail. Obvious expectations OFTEN fail. And that failure can provide nice opportunity in the opposite direction.
• Area D offers some beautiful price action to trigger BOF entry LONG. Lower tail rejection. Stall with an inside bar. A tiny break of the low of the inside bar. Then compression against the level and eventual break higher.
• Step through the candles following the break lower at D and place yourself in the mindset of anyone who might have entered SHORT on the break down. Feel their emotion as price stalls. And stalls. And stalls. This is how you play the metagame – playing against the other traders who find themselves stuck in the market and subject to extremes of emotion.

 

Lessons:

• Whenever you find any price occurrence which suggests OBVIOUS expectations (especially in accordance with standard technical analysis), pause and ask yourself the following question: "What if it doesn't?"
• Obvious expectations CAN and DO fail. This failure can provide good trade opportunity and good trade conditions in the opposite direction.

 

Thursday 15th March 2018:

Patterns repeat…

Looking at a higher timeframe (5 minute chart) to get a wider perspective:

Notes:

• F = Strong bullish drive from 11:00 to 11:30
• G = The strong bullish drive is unable to continue, settling into a tight sideways congestion.
• H = Strong drive down.
• I = Opportunity available on a retest of the tight sideways congestion.
• And again…
• J = Strong bearish drive from 13:45 to 14:05
• K = The strong bearish drive is unable to continue, settling into a tight sideways congestion.
• L = Strong drive up.
• M = Opportunity available on a retest of the tight sideways congestion.

 

Lessons:

• Watch for a potential top or bottom when a very strong bullish or bearish drive suddenly stops and fails to continue.
• If a top or bottom pattern forms as a tight sideways congestion, with a subsequent strong break from that congestion, look for trade opportunity on any retest.

 

Happy trading,

Lance Beggs

 

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